Build the business that gives you options – before you need them

If you’re planning on continuing to grow and evolve your business into the future, you need to have options. Options as you grow and options when the time comes to sell.

I always say that a business must enable you, not tether you. Your business needs to be an enabler of a better life, otherwise why would you do it?

So options are essential.

Options like freedom of time, financial freedom, and particularly strategic freedom that gives you options and more control when it comes time to sell.

 

One Founder’s Story: Less about money; more about control and options

A founder recently sold his business for a figure in the tens of millions.

He’s not happy.

By his own admission he doesn’t need the money.

He is actually more than unhappy with the whole experience and the outcomes, because:

 

• He wasn’t really ready to sell his company, but felt under pressure because of market conditions at the time, changing norms about work flexibility, working from home, the impact of that on the physical workplace vibe, and I suspect he felt that he had lost some control over his team.
• He spent 40 years building a successful company, but he was losing the energy and drive to keep going.
• He hadn’t prepared his business strategically for sale, thinking he would generate a certain sale value (that he had already predetermined in his own mind) as a matter of course.
• He missed the fact that the acquirers saw his business as a valuable asset, but lack of founder-independence and lack of immediate transferability meant that the multiple was discounted.
• Although the sale amount was considerable, it was way under his expectations because the multiple was discounted.
• Worse still was that he had to stay on board as an employee for two years.
• From master of the universe to employee – that made him resentful. It was an agonisingly long 24 months from his perspective.
• He earned many millions in the sale of his business, but after 40 years he limited his options, and his control, because he didn’t approach this strategically.

It happens to many founders who see the sale of their company as an event. Exit is a strategy, not a transaction.

 

Why Acquirers Pay More for Founder-Independent Businesses

From an exit perspective, founder dependence is one of the biggest risks for an acquirer.

Buyers do not want:

• Key relationships tied to one person
• Undocumented decision-making by the founder
• A business that loses momentum without the founder present
• Cultural or operational fragility

They want a business that:

• Runs predictably
• Has capable leaders in place
• Can transition smoothly
• Doesn’t rely on the founder for all decisions or problem-solving

 

The more independent the business is from you, the lower the perceived risk — and the higher the multiple.

You need to prepare for your exit with intent, so you have options and more control over when you sell, who you sell to, and your own terms for leaving.

Founder-independence makes your business more valuable at exit and helps provide you with more options. It will also enable growth once the business can function without being operationally dependent on you.

Don’t wait until your options are limited – by age, energy, health, market timing, or unexpected pressure from a potential buyer whose offer is way under your expectations.

If you have a 7 or 8-figure business and would like to start talking about exit and how you may plan for it strategically, get in touch.

Exit is a strategy, not an event.